Microsoft Reports $92.3 Billion in Revenue as Azure Grows 48% and Capital Spending Falls Short of Estimates
Key Facts
Microsoft reported revenue of $92.3 billion in the first quarter of its 2027 fiscal year, ended September 30, 2026, up 19% year over year. The company posted diluted earnings per share of $4.92 under GAAP, up 32% from the year-earlier period. Diluted earnings per share were $4.89 excluding the impact of OpenAI investments, an annual increase of 18%. The results came as its cloud business recorded strong growth, while capital spending fell short of market estimates. Published comparisons showed that the company’s revenue, operating income and GAAP earnings per share exceeded expectations.
Microsoft Cloud revenue was about $63.9 billion, above the market estimate of $61.62 billion. Chief Financial Officer Amy Hood said cloud revenue growth accelerated to 30% year over year, and to 31% excluding the impact of currency. These figures offer a broader view of cloud business performance than Azure alone, as they aggregate Microsoft Cloud revenue across the company’s operations. Azure revenue rose 48%, compared with an estimated growth rate of 44.8%. The company’s previous quarterly guidance had called for growth of about 45% in constant currency.
Compared with the previous quarter, cloud business growth accelerated. In the fourth quarter of fiscal 2026, Microsoft Cloud revenue was about $59.3 billion, up 27% year over year, while Azure and other cloud services revenue increased 43%. In the latest quarter, Microsoft Cloud growth accelerated to 30%, and Azure growth reached 48%. These figures highlight the cloud business’s continued expansion over two consecutive quarters. They also put Azure’s latest result above the company’s guidance before the quarter began.
On profitability, operating income was $45.9 billion, above the market estimate of $44.1 billion. Net income rose to $36.6 billion, up 32% year over year under GAAP. The company distinguished between two earnings-per-share measures: $4.92 under GAAP and $4.89 excluding the impact of OpenAI investments. Earnings per share under the first measure rose 32% annually, compared with 18% growth for the adjusted measure. The market estimate cited in coverage did not include a separate figure for adjusted earnings.
Capital spending was $39.37 billion, compared with an estimate of $45.93 billion. The company’s previous guidance had also called for capital spending of more than $50 billion during the quarter. Actual spending therefore came in below both the market estimate and the level indicated in its previous guidance. Meanwhile, commercial remaining performance obligations totaled $677 billion, up 73% from a year earlier. This figure represents remaining contractual performance obligations, not revenue recognized during the quarter.
By business segment, Agents and Infra recorded revenue of $76.8 billion, up 25%. Devices and Consumer revenue was $15.5 billion, down 3%. The results show a divergence between growth in infrastructure and related services and a decline in devices and consumer revenue. During the quarter, the company returned $10.2 billion to shareholders through dividends and share repurchases. That amount was for the first quarter of fiscal 2027.
Microsoft shares rose more than 4% in extended trading after the results were announced, according to Investing.com. The stock had closed at $527.35999 on October 28, 2026. Microsoft said it would hold an earnings call by phone and online on October 28 at 2:30 p.m. Pacific time to discuss quarterly performance and forward-looking information. Its previous guidance included expected revenue of $89.85 billion to $90.95 billion, along with expected Azure growth of about 45% in constant currency. Actual revenue came in at $92.3 billion, above the company’s range.